Commitment To Jail Debt Blocks Use Of Sales Tax

September 26, 1986|By Michael Griffin of The Sentinel Staff

KISSIMMEE — A $2.5 million windfall in sales tax collections remains just beyond county officials' reach because a 2-year-old loan agreement earmarked nearly all the money for repayment of the new jail's construction debt.

Commissioners say they could lower property taxes if some of the sales tax excess could be spent on capital improvements. But County Finance Director Tom Kessler says the lion's share of the revenues should go to repay the jail debt early to save money in interest payments.

The difference of opinion sparked a controversy earlier this month between Kessler and County Administrator Eleanor Anderson when Kessler paid $890,400 toward the jail debt early after Anderson asked that no advance payments be made.

The problem began in August when officials realized they would collect $2.5 million from the county's half-cent sales tax this year -- about $1 million more than is needed to meet payments on the $3.9 million loan. Under the agreement of the 1984 loan with First Florida Bank, the county is obligated to use all but $500,000 of the money to repay the debt -- which has been reduced to $2 million.

Anderson hoped to reschedule the debt to make the county payments smaller -- freeing more money for improvements to the courthouse. She wrote a memorandum Aug. 6 to County Clerk Mel Wills asking that all advance payments be stopped until she could meet with bank officials.

Kessler, who works for Wills, said he made an $890,400 prepayment Sept. 10 because ''she hadn't talked to anyone at the bank or with any commissioners yet'' and the advance payment was consistent with county policy.

Commissioners said Thursday they were angered by Kessler's disregard of Anderson's request. ''It really doesn't make me too happy,'' Commissioner Larry Whaley said. ''He should have at least brought that up for discussion before he did it.''

Whaley and commissioners Randy Sheive and Jim Swan said using the sales tax revenues instead of property taxes would keep ad valorem assessments lower next year.

Wills asked First Florida President Allen ''Spike'' Carroll to return the $890,400 and to consider rescheduling the loan.

Carroll said Thursday First Florida will return the money, but that bank officials are opposed to rescheduling the debt. New federal tax laws could cost the county money if the terms are changed, he said.

Under old tax laws, the interest paid on the loan was not taxable because the money borrowed went toward a government project. If the tax reform bill before Congress passes, such loans would be taxable, Carroll said.

Since the county loan was approved in 1984, the loan would remain non- taxable even if the new bill passes, Carroll said. ''But if they start monkeying with it all that might change and it could be considered a new loan -- one that can be taxed.''

Wills and county commissioners are scheduled to meet Monday. Wills said he'll suggest commissioners change the loan agreement to earmark just $1.5 million in sales tax collections for the debt repayment to free up another $1 million for courthouse improvements.